Common shares outstanding plus shares underlying stock-based awards
totaled 474 million on June 30, 2013, compared with 468 million one year
ago.

Net sales increased 22% to $15.70 billion in the second quarter,
compared with $12.83 billion in second quarter 2012. Excluding the $392
million unfavorable impact from year-over-year changes in foreign
exchange rates throughout the quarter, net sales grew 25% compared with
second quarter 2012.

Operating income decreased 26% to $79 million in the second quarter,
compared with $107 million in second quarter 2012. The unfavorable
impact from year-over-year changes in foreign exchange rates throughout
the quarter on operating income was $18 million.

Net loss was $7 million in the second quarter, or $0.02 per diluted
share, compared with net income of $7 million, or $0.01 per diluted
share, in second quarter 2012.

“We’re so grateful to our customers for their response to Kindle devices
and our digital ecosystem. This past quarter, our top 10 selling items
worldwide were all digital products – Kindles, Kindle Fire HDs,
accessories and digital content,” said Jeff Bezos, founder and CEO of
Amazon.com. “The Kindle service keeps getting better. The Kindle Store
now offers millions of titles including more than 350,000 exclusives
that you won’t find anywhere else. Prime Instant Video has surpassed
40,000 titles, including many premium exclusives like Downton Abbey
and Under the Dome. And we’ve added more than a thousand books,
games, educational apps, movies and TV shows to Kindle FreeTime
Unlimited, bringing together in one place all the types of content kids
and parents love.”

Highlights

Amazon and Viacom Inc. announced an expanded multi-year,
multi-national digital video licensing agreement to bring hundreds of
TV shows and thousands of TV episodes from Viacom to Prime Instant
Video, including a collection of TV shows that customers won’t find on
any other digital video subscription service. Prime members now have
unlimited instant streaming access to popular kids’ titles such as Dora
the Explorer and SpongeBob SquarePants, along with
top-rated shows from MTV and COMEDY CENTRAL.

Amazon announced expanded multi-year licensing agreements with
NBCUniversal Cable & New Media Distribution and PBS Distribution,
bringing popular TV shows to Prime Instant Video such as Grimm, Suits,
NOVA, and Masterpiece. Prime Instant Video now includes
more than 41,000 movies and TV episodes that are available for Prime
members to watch at no additional charge.

Comedy pilots Alpha House and Betas, along with kids
pilots Annebots, Creative Galaxy and Tumbleaf,
have been given the greenlight to begin production on a full series of
episodes that will air exclusively on Prime Instant Video later this
year and in early 2014.

Amazon announced that since launch, Kindle FreeTime Unlimited has
already added more than a thousand books, games, educational apps,
movies and TV shows, including popular kids’ titles from Disney,
Warner Bros. Interactive Entertainment, Electronic Arts and more.
Kindle FreeTime Unlimited brings together for the first time all the
types of content kids and parents love into one simple, unlimited,
easy-to-use service for kids ages 3-8.

Amazon announced that the Amazon Appstore is now available to millions
of customers in nearly 200 countries, giving them access to apps and
games from top brands like Disney and Electronic Arts, new releases
including “Angry Birds Friends” and all-time favorites like “Temple
Run 2”. Customers around the world can now buy apps and games directly
from the Amazon Appstore on Macs, PCs or Android phones and tablets,
including Kindle Fire.

Amazon announced that customers can now use Amazon Coins to purchase
apps, games and in-app items in the Amazon Appstore and on Kindle
Fire. For customers, Amazon Coins is an easy way to purchase apps and
in-app items on Kindle Fire, and for developers it’s another
opportunity to drive traffic, downloads and increased monetization.
With discounts of up to 10% for purchasing Coins in bulk, it’s also an
opportunity for customers to save money on their app and game
purchases.

Amazon Publishing announced Kindle Worlds, the new publishing model
that allows any writer to publish authorized stories inspired by
popular Worlds and make them available for readers to purchase in
the Kindle Store, and earn up to a 35% royalty while doing so.

Amazon Publishing announced that Oliver Pötzsch has become the first
Amazon Publishing author to sell 1 million copies in combined print,
audio, and Kindle English language editions worldwide.

Amazon announced that Kindle Fire HD and Kindle Fire HD 8.9” are now
available to customers in over 170 countries and territories around
the world through Amazon.com, giving customers access to millions of
apps, games, books, audiobooks and magazines, including more than
350,000 books that are exclusive to the Kindle Store.

Amazon introduced Kindle Paperwhite and Kindle Fire HD in China,
available both online at amazon.cn and popular retail locations.
Customer response to this launch significantly exceeded expectations
and product went out of stock in many retail outlets within the first
week.

Amazon announced that Kindle Fire HD is now available for customers to
purchase in Canada at www.amazon.ca and select retailers. In addition,
Kindle Paperwhite and Kindle Fire HD are now available for customers
to purchase in India at www.amazon.in and select retailers.

Amazon announced new accessibility features for the free Kindle for
iOS reading app, making it easier than ever for blind and visually
impaired customers to navigate their Kindle libraries, read and
interact with their books and more. Similar accessibility enhancements
will be available on additional platforms in the future.

Amazon announced the launch of its marketplace in India,
www.amazon.in, providing customers a convenient and trustworthy online
shopping experience and Indian retailers of all sizes a robust and
scalable platform to sell their products online with no listing fees
and pay-as-you-go fulfillment services.

Goodreads announced it now has over 20 million members – up from 10
million in less than one year. Goodreads is a leading site for readers
and book recommendations that helps people find and share books they
love. Goodreads members can discover new books by seeing what their
friends are reading or by using the Goodreads Book Recommendation
Engine; share ratings and recommendations; track what they have read;
and list what they want to read.

As part of its Amazon Career Choice Program, Amazon is increasing the
amount it will pre-pay for hourly employees to pursue associate
degrees or vocational certifications. The program is designed to
expand the choices available to its employees in well-paying high
demand careers, whether its building a career at Amazon or as a step
towards a career in another industry, such as computer and information
technology, health and sciences, and accounting. Amazon will pre-pay
an eligible employee’s tuition up to $3,000 per year or up to $12,000
over four years.

Amazon Web Services (AWS) became the first major cloud provider to
achieve FedRAMP Compliance which recognizes the ability of AWS to meet
extensive security requirements and compliance mandates for running
sensitive US government applications and protecting data. FedRAMP
certification simplifies and speeds the ability for government
agencies to evaluate and adopt AWS for a wide range of applications
and workloads.

AWS announced the launch of the AWS Certification Program, which
recognizes IT professionals that possess the skills and technical
knowledge necessary for building and maintaining applications and
services on the AWS Cloud. AWS Certifications help organizations
identify candidates and consultants who are proficient at architecting
and developing for the cloud.

AWS announced it had lowered prices by up to 80% on Amazon EC2
Dedicated Instances, instances that run on single-tenant hardware
dedicated to a single customer account. In addition, AWS lowered
prices on Amazon RDS instances with On-Demand price reductions of up
to 28% and Reserved Instance (RI) price reductions of up to 27%.

Financial Guidance

The following forward-looking statements reflect Amazon.com’s
expectations as of July 25, 2013, and are subject to substantial
uncertainty. Our results are inherently unpredictable and may be
materially affected by many factors, such as fluctuations in foreign
exchange rates, changes in global economic conditions and consumer
spending, world events, the rate of growth of the Internet and online
commerce and the various factors detailed below.

Third Quarter 2013 Guidance

Net sales are expected to be between $15.45 billion and $17.15
billion, or to grow between 12% and 24% compared with third quarter
2012.

Operating loss is expected to be between $440 million and $65 million,
compared to $28 million in third quarter 2012.

This guidance includes approximately $340 million for stock-based
compensation and amortization of intangible assets, and it assumes,
among other things, that no additional business acquisitions,
investments, restructurings or legal settlements are concluded and
that there are no further revisions to stock-based compensation
estimates.

A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and
will be available for at least three months at www.amazon.com/ir. This
call will contain forward-looking statements and other material
information regarding the Company’s financial and operating results.

These forward-looking statements are inherently difficult to predict.
Actual results could differ materially for a variety of reasons,
including, in addition to the factors discussed above, the amount that
Amazon.com invests in new business opportunities and the timing of those
investments, the mix of products sold to customers, the mix of net sales
derived from products as compared with services, the extent to which we
owe income taxes, competition, management of growth, potential
fluctuations in operating results, international growth and expansion,
the outcomes of legal proceedings and claims, fulfillment and data
center optimization, risks of inventory management, seasonality, the
degree to which the Company enters into, maintains, and develops
commercial agreements, acquisitions, and strategic transactions, and
risks of fulfillment throughput and productivity. Other risks and
uncertainties include, among others, risks related to new products,
services, and technologies, system interruptions, government regulation
and taxation, payments, and fraud. In addition, the current global
economic climate amplifies many of these risks. More information about
factors that potentially could affect Amazon.com’s financial results is
included in Amazon.com’s filings with the Securities and Exchange
Commission (“SEC”), including its most recent Annual Report on Form 10-K
and subsequent filings.

Our investor relations website is www.amazon.com/ir and we encourage
investors to use it as a way of easily finding information about us. We
promptly make available on this website, free of charge, the reports
that we file or furnish with the SEC, corporate governance information
(including our Code of Business Conduct and Ethics), and select press
releases and social media postings.

About Amazon.com

Amazon.com, Inc. (NASDAQ: AMZN), a Fortune 500 company based in Seattle,
opened on the World Wide Web in July 1995 and today offers Earth’s
Biggest Selection. Amazon.com, Inc. seeks to be Earth’s most
customer-centric company, where customers can find and discover anything
they might want to buy online, and endeavors to offer its customers the
lowest possible prices. Amazon.com and other sellers offer millions of
unique new, refurbished and used items in categories such as Books;
Movies, Music & Games; Digital Downloads; Electronics & Computers; Home
& Garden; Toys, Kids & Baby; Grocery; Apparel, Shoes & Jewelry; Health &
Beauty; Sports & Outdoors; and Tools, Auto & Industrial. Amazon Web
Services provides Amazon’s developer customers with access to
in-the-cloud infrastructure services based on Amazon’s own back-end
technology platform, which developers can use to enable virtually any
type of business. Kindle Paperwhite is the most-advanced e-reader ever
constructed with 62% more pixels and 25% increased contrast, a patented
built-in front light for reading in all lighting conditions, extra-long
battery life, and a thin and light design. The new latest generation
Kindle, the lightest and smallest Kindle, now features new, improved
fonts and faster page turns. Kindle Fire HD features a stunning custom
high-definition display, exclusive Dolby audio with dual stereo
speakers, high-end, laptop-grade Wi-Fi with dual-band support,
dual-antennas and MIMO for faster streaming and downloads, enough
storage for HD content, and the latest generation processor and graphics
engine—and it is available in two display sizes—7” and 8.9”. The
large-screen Kindle Fire HD is also available with 4G wireless, and
comes with a groundbreaking $49.99 introductory 4G LTE data package. The
all-new Kindle Fire features a 20% faster processor, 40% faster
performance, twice the memory, and longer battery life.

References to customers mean customer accounts, which are unique
e-mail addresses, established either when a customer places an order
or when a customer orders from other sellers on our websites. Customer
accounts exclude certain customers, including customers associated
with certain of our acquisitions, Amazon Payments customers, Amazon
Web Services customers, and the customers of select companies with
whom we have a technology alliance or marketing and promotional
relationship. Customers are considered active when they have placed an
order during the preceding twelve-month period.

Seller Accounts

References to sellers means seller accounts, which are established
when a seller receives an order from a customer account. Sellers are
considered active when they have received an order from a customer
during the preceding twelve-month period.

Registered Developers

References to registered developers mean cumulative registered
developer accounts, which are established when potential developers
enroll with Amazon Web Services and receive a developer access key.